2. Mineral Properties

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements

NOTE 2 - Mineral Properties

For the six months ended June 30, 2012 and 2011, the Company has incurred $43,995 and $15,322,532 in mineral property costs which have been charged to operations.  A summary by property is as follows:

	Ziggurat Property		Poker Flats Property		Arbacoochee Gold Prospect		Total
Six Months Ended June 30, 2012
Impairment	$	–	$	–	$	–	$	–
Option payments		–		–		–		–
Property expenditures		–		36,560		–		36,560
Exploration costs		3,705		3,730		–		7,435
	$	3,705	$	40,290	$	–	$	43,995
Six Months Ended June 30, 2011
Impairment	$	–	$	–	$	–	$	–
Option payments		10,120,760		4,974,000		–		15,094,760
Property expenditures		–		36,560		–		36,560
Exploration costs		120,925		66,467		3,820		191,212
	$	10,241,685	$	5,077,027	$	3,820	$	15,322,532
From July 8, 2010 (Inception of Exploration Stage) to June 30, 2012
Impairment	$	–	$	–	$	104,027	$	104,027
Option payments		10,263,010		5,056,750		–		15,319,760
Property expenditures		–		73,120		–		73,120
Exploration costs		189,222		114,709		3,820		307,751
	$	10,452,232	$	5,244,579	$	107,847	$	15,804,658

Ziggurat Property

On December 27, 2010, the Company entered into Option and Mining Claim Acquisition Agreement (the “Option Agreement”) with Mexivada Mining Corporation (“MMC”) and Sphere Resources, Inc. (“Sphere”) .  Pursuant to the option agreement, the Company was granted an option to acquire up to a 70% interest in MMC’s Ziggurat property. Upon earning a 70% interest, the Company was to grant a 35% interest to Sphere under the terms of a joint venture agreement. On December 27, 2010, the Company paid $25,000 to MMC.

On March 28, 2011, the Option Agreement was amended pursuant to a Memorandum of Understanding dated March 9, 2011, such that Sphere’s option to acquire an interest in the Ziggurat property was cancelled and the Company was granted the option to acquire up to a 75% interest for the following consideration:

● Issuance of 393,125 shares of common stock (issued at a fair value of $7,076,250) and 41,875 shares of common stock (issued at a fair value of $753,750) to Sphere and MMC, respectively on execution of the amended Option Agreement;

● Issuance of a warrant to purchase 193,100 shares (recorded at a fair value of $1,853,760) and a warrant to purchase 41,875 shares (recorded at a fair value of $402,000) to Sphere and MMC, respectively, with an exercise price of $20.00 per share until March 28, 2016;

● Payment of $35,000 to MMC by May 27, 2011 (paid);

● Payment of $25,000 to MMC by December 22, 2012 (not paid); and

● Payment of $25,000 to MMC by December 22, 2013.

As additional consideration, the Company was to register 25,000 and 6,250 shares owned by Sphere and MMC, respectively, upon the filing of an S-1 Registration Statement with the SEC by May 1, 2011. The failure of filing this S-1 would not result in any legal action to enforce this provision. As of June 30, 2012, the Company has not filed the S-1 Registration Statement and has not registered such shares.

Further, the Company paid $117,250 and $16,750 (not paid) to Sphere and MMC, respectively, of which 50% is to be paid within 60 days after the effective date of a S-1 to be filed with the SEC and the remainder after such date of Spartan obtaining financing of $2,000,000. As of June 30, 2012, the Company has neither filed an S-1 nor obtained such financing.

The Company will be considered to have acquired a 51% interest in the Ziggurat property by incurring exploration expenditures of $1,500,000 on or before March 28, 2014 and may acquire an additional 24% by incurring an additional $1,000,000 by March 28, 2014 and completing a mining prefeasibility study on or before March 28, 2016.

In consideration of MMC transferring the option agreement to the Company, Sphere is required to issue certain shares of common stock to MMC.

Upon earning a 75% interest in the Ziggurat property, a joint venture will be formed on a 75/25 basis for the Company and MMC, respectively.

On December 22, 2011, the Company, MMC and Sphere entered into an Agreement for Grant of Net Smelter Royalty (“NSR”) of its Ziggurat property.  Under this Agreement, the Company grants, conveys and assigns to Sphere a two and one-half percent (2.5%) NSR and grants, conveys and assigns to MMC a one-half of one percent (0.5%) NSR on the Company's share of mineral production from the Ziggurat Property if and when there is production from the Ziggurat Property. It is the intent and understanding of the parties that the terms NSR and the term Exploration Expenditures shall have the same meanings and applications to the Ziggurat Property as those terms are defined and applied in the Poker Flats Option Agreement to the Poker Flats Property, notwithstanding any other verbal conversations between the parties.

The agreement further stipulates if and when the Company elects to sell and convey all or a portion of its interest in the Ziggurat Property, the Company shall have the right to purchase up to one hundred percent (100%) of the two and one-half percent (2.5%) NSR granted, conveyed and assigned by the Company to Sphere, under terms to be agreed upon by the parties.

Poker Flats Property

On December 22, 2010, the Company entered into an Option and Mining Claim Acquisition Agreement (the “Option Agreement) between MMC and Sphere .  Pursuant to the Option Agreement, the Company was granted an option to acquire up to a 70% interest in MMC’s Poker Flats property located in Elko County, Nevada.  The Poker Flats Property is subject to a 3% NSR.  Upon earning a 70% interest, the Company was to grant a 35% interest to Sphere under the terms of a joint venture agreement. On December 22, 2010, the Company paid $25,000 to MMC.

On March 28, 2011, the Option Agreement was amended pursuant to a Memorandum of Understanding dated March 9, 2011, such that Sphere’s option to acquire an interest in the Poker Flats property was cancelled and the Company was granted the option to acquire up to a 75% interest for the following consideration:

● Issuance of 194,375 shares of common stock (issued and recorded at a fair value of  $3,498,750) and 20,625 shares of common stock (issued and recorded at a fair value of $371,250) to Sphere and MMC, respectively on execution of the amended Option Agreement; and

● Issuance of a warrant to purchase 94,375 shares (recorded at a fair value of $906,000) and a warrant to purchase 20,625 shares (recorded at a fair value of $198,000) of common stock to Sphere and MMC, respectively, with an exercise price of $20.00 per share until March 28, 2016.

As additional consideration, the Company was to register 25,000 and 6,250 shares of common stock owned by Sphere and MMC, respectively, upon the filing of a S-1 with the SEC by May 1, 2011. The failure of filing this S-1 would not result in any legal action to enforce this provision. As of June 30, 2012, the Company had not filed the S-1 and has not registered such shares.

Further, the Company paid $57,750 and $8,250 (not paid) to Sphere and MMC, respectively, of which 50% is to be paid within 60 days after the effective date of a S-1 to be filed with the SEC and the remainder after such date of the Company obtaining financing of $2,000,000. As of June 30, 2012, the Company has neither filed an S-1 nor obtained such financing.

The Company will be considered to have acquired a 51% interest in the Poker Flats property by incurring exploration expenditures of $500,000 on or before March 28, 2014 and may acquire an additional 24% by incurring an additional $250,000 and completing a mining prefeasibility study on or before March 28, 2016.

In consideration of MMC transferring the option agreement to Spartan, Sphere is required to issue tranches of shares of common stock to MMC.

Upon execution of the amended Option Agreement, 75% of the 3% NSR was granted to the Company and 25% to MMC. Each party will have the option to purchase up to a 3% interest of the NSR for $1,000,000 per percentage point. Further, a 2% NSR, for any bullion and other products, was granted to Sphere. Should the Poker Flats property be sold or conveyed to any third party, the Company will be granted the right to purchase the 2% NSR.

Upon earning a 75% interest in the Poker Flats property, a joint venture will be formed on a basis of a 75/25 basis for the Company and MMC, respectively.

On April 1, 2011, the Company entered into a Mining Lease and Agreement (the “Agreement”) with K & K Tomera Lands, LLC, a Nevada Limited Liability Company (“Tomera”). This Mining Lease and Agreement pertains to the Poker Flats property located within the Carlin Mining District in Elko County, Nevada.

Under the terms of this Agreement, the Company agreed to pay Tomera a 5% NSR, as defined in the Agreement. In order to maintain this Agreement in effect, the Company shall pay to Tomera Advance Minimum Royalty (“AMR”) Payments. AMR payments are calculated based on the net mineral acres leased on an annual basis. The Company paid, at the execution of the Agreement, $30,800 for the first year of the lease based on the 1,760 net mineral acres leased at $17.50 per acre. Future AMR payments, on a per net mineral acre basis, are: $17.50 per acre on the first and second anniversaries of the Agreement, $21.00 per acre on the third and fourth anniversaries, $24.50 per acre on the fifth and sixth anniversaries, and $28.00 per acre on the seventh and any subsequent anniversaries. The term of the Agreement is for a period of ten years. The Company has the option to extend the initial term for an additional ten year period.

In connection with the Mining Lease and Agreement, the Company entered into a Surface Access and Use Agreement on April 1, 2011 with Kevin Tomera, a Nevada resident, which grants the Company general rights of ingress and egress over certain surface tracts and the right to use the surface tracts in conduct of its mineral exploration, development and mining activities.  Additionally, Tomera has granted the Company an option to purchase portions of the surface tracts.  Under the terms of the Surface Access and Use Agreement, the Company agrees to pay Kevin Tomera annual rental of $4.50 per acre for each acre of land included in the surface tracts.  The Company paid $5,760 during the year ended December 31, 2011.  The term of the Agreement is for ten years.

On December 22, 2011, the Company, MMC and Sphere entered into an Agreement for Grant of NSR of its Poker Flats property.  Under this Agreement, the Company grants, conveys and assigns to Sphere a two percent (2%) NSR, to be calculated in the same manner as the “Net Smelter Returns” defined in the Poker Flats Option Agreement, on its share of mineral production from the Poker Flats Property if and when there is production from the Poker Flats Property. This 2% granted by the Company to Sphere on the Company's share of production from the Poker Flats Property is in addition to the three percent (3%) NSR retained by the owner of the mining claims leased to MMC and Area of Interest defined therein, subject to the Poker Flats Option Agreement.

The agreement further stipulates that:

a.  If and when the Company elects to sell and convey all or a portion of its interest in the Poker Flats Property, the Company shall have the right to purchase up to one hundred percent (100%) of the two percent (2%) NSR granted, conveyed and assigned by the Company to Sphere on its share of production from the Poker Flats Property, under terms to be agreed upon by the Company and Sphere, and

b.  If and when the Company elects to sell and convey all or a portion of its interest in the Poker Flats Property, the Company shall have the right to purchase up to seventy five percent (75%) and MMC shall have the right to purchase up to twenty five percent (25%) of the three percent (3%) NSR on mineral production from the Poker Flats Property retained by the owner of the mining claims subject to the Poker Flats Option Agreement, for one million U.S. dollars (U.S. $1,000,000.00) per NSR percentage point.

Arbacoochee Gold Prospect

On October 22, 2010, the Company acquired all of the mineral rights in the Arbacoochee Gold Prospect located in northeastern Alabama. The acquisition includes all legal rights and equitable title to the mineral rights held by deed in the name of Alabama Mineral Properties, LLC (“AMP”).

The mineral rights were acquired for cash of $50,000 and 5,563,468 shares of the Company’s issued and outstanding common stock at a fair value of $54,027.  The shares were a contribution from shareholders, resulting in a capital contribution.

The Company assumed an existing mineral royalty agreement which requires the payment of 6% NSR overriding royalty for any and all precious metals that are mined, processed or recovered from the Arbacoochee Gold Prospect to AMP.

At December 31, 2010, the Company impaired the Arbacoochee Gold Prospect and $104,027 was charged to operations.